PARTNERSHIP LIQUIDATION

On December 2015 Simon and Mark decided to close their SM partnership. The following balance sheet after the 2015 income had been distributed.
Assets Liabilities
Bank 11,400 Account payable 108,000
Account Receivables 114,000 Loan from Simon 80,000
Inventory 74,000 Total Liabilities 188,000
Land and buildings 897200 Capital
Motor vehicles 120,000 Simon, Capital 722,400
Machinery 60,000 Mark, Capital 539,000
Goodwill 172,800 Total Capital 1,261,400
Total Assets 1,449,400 Total Liab. & Capital 1,449,400
The partnership’s assets were sold at following cash price: Land buildings $ 1 250 000, Motor vehicle $ 100 000, Machine $ 80 000
Inventory $ 70 000. Goodwill was fully amortized, Account Receivable and Account Payable were fully collected and paid.
Gain or Loss from the sale of assets will be distributed according to profit/loss ratio Simon and Mark at 4:3
Instructions:
a. Calculate cash available after all assets had been sold, all receivable and payable had been received and paid (2 points).
Cash available after all assets had been sold
11,400 1250000 100000 80000 70000 1,511,400
Cash available after receivable had been colected and payable had been paid
1,511,400 114,000 -108,000 -80,000 1,437,400

b. Calculate Simon and Mark Capital after the distribution of Gain/loss from the sale of partnership assets. (8 points)
Gain/loss from sales of assets and goodwill deleted
Revaluation value 1250000 100000 80000 70000
Book value 897200 120,000 60,000 74,000 172,800
Gain/loss 352800 -20000 20000 -4000 -172800 176000
Distribution of Gain/loss: Simon 4/7 * 176000 100571.43 722,400 822971.43
Mark 3/7* 176000 75428.57 539,000 614428.57

c. Calculate the amount cash distributed for Simon and Mark (2 points).
The amount cash distributed for Simon: Simon adjusted Capital + Loan= 822971.43 + 80000 902,971.43
Tha amount cash distributed to Mark: Mark adjusted capital 614,428.57